SOFTMAX CO.,LTD

Business Details

A single segment engaged in the development, sales, and maintenance of comprehensive medical information systems, including electronic medical record systems, ordering systems, and medical accounting systems. The core product, the "PlusUs series," is offered via public cloud and private cloud, with a nationwide direct sales structure centered on Kyushu. Sales are categorized into three segments: software, hardware, and Maintenance Services, etc. The company adopts a public cloud environment registered on the ISMAP Cloud Service List, capturing demand driven by the promotion of medical DX.

Recent Overview

In Q1 2026, net sales rose sharply by 70.5%, but profit declined due to increased costs

In the first quarter of FY2026 (ending December 2026) (January to March 2026), net sales rose sharply to ¥2,295 million (up 70.5% year on year). By category, software rose 203.1%, hardware rose 184.0%, and Maintenance Services, etc. rose 115.2%. On the other hand, cost of sales increased substantially due to investment in strengthening personnel structure and developing new functions, resulting in a decline in operating profit to ¥227 million (down 7.6% year on year) and quarterly net profit to ¥169 million (down 4.1% year on year). Orders received fell to ¥1,031 million (down 13.3% year on year), and the order backlog declined to ¥2,426 million (down 35.1% year on year); however, the company stated that both sales and orders were in line with plan. The full-year earnings forecast (net sales of ¥7,800 million, operating profit of ¥800 million) remains unchanged. The company is proceeding with the digitization of promissory note transactions.

Key Products

Growth Drivers

• Acceleration of medical DX promotion policy: The "Basic Policy 2025" is promoting the development of the "Nationwide Medical Information Platform" infrastructure, with nationwide operation of the electronic medical record information sharing service expected to begin during FY2026, strengthening system demand
• Demand associated with the June 2026 medical fee schedule revision: The revision, reflecting rising prices and wages, is expected to heighten healthcare institutions' willingness to invest in strengthening their management foundations, stimulating demand for system introduction and replacement
• Steady capture of new installation projects and replacement demand from existing customers: In Q1 2026, software sales rose 203.1% year on year and hardware sales rose 184.0% year on year, both showing substantial growth
• Differentiation through the cloud-based delivery model: Adoption of a public cloud environment registered on the ISMAP Cloud Service List achieves differentiation in an increasingly competitive market, offering reduced maintenance burden, improved business continuity, and more efficient information sharing
• Accumulation of maintenance service revenue: Sales of Maintenance Services, etc. grew steadily by 15.2% year on year as the number of installations increased, expanding the stock-type revenue base
• Advancing practical application of generative AI and other advanced technologies: Through pilot trials aimed at supporting document creation and improving operational efficiency in medical settings, the company is promoting the development of new value-added services

Risks

• Decline in orders received and order backlog: In Q1 2026, orders received fell 13.3% year on year and the order backlog fell 35.1% year on year, posing a risk of slowing sales growth in subsequent periods
• Decline in operating margin: The operating margin in Q1 2026 fell sharply to 9.9% from 18.2% in the same quarter of the previous year. If cost increases from strengthening personnel structure and investment in developing new functions continue, there is a risk of prolonged deterioration in profitability
• Rising cost of sales ratio: Cost of sales in Q1 2026 was ¥1,788 million (cost of sales ratio of 77.9%), a substantial increase from 64.2% in the same quarter of the previous year, indicating an emerging deterioration in the profit structure
• Deteriorating management environment at healthcare institutions: Risk of restrained system investment due to rising procurement costs for medical consumables amid soaring utility costs and raw material prices, as well as increased costs associated with responding to work-style reforms for physicians
• Continued low equity ratio: The company continues to carry long-term borrowings related to the acquisition of investment real estate (fixed liabilities of ¥1,641 million, short-term borrowings of ¥1,350 million), maintaining a high level of financial leverage
• Risk of sales concentration on specific customers: The structure, in which the receipt and recording of large-scale projects significantly affects business performance, carries the risk that performance may be swayed by the circumstances of specific customers
• Security risk: The possibility of increased costs for strengthening the security of provided systems in response to the rise in ransomware attacks on healthcare institutions
• Risk related to responding to the medical fee schedule revision: Development costs associated with responding to the June 2026 medical fee schedule revision may lead to a short-term increase in expenses